NEAR EL AROUB REFUGEE CAMP, West Bank — The old stone compound set amid Palestinian farmland between the cities of Bethlehem and Hebron has a relatively new fence.

The compound, with eight buildings spread over 9.5 acres and a sign that calls it “House of Blessing,” was a church-run hospital in the 1950s, and it later became a hostel. It had sat dormant since around 2000, until the conservative Jewish-American philanthropist Irving I. Moskowitz began a major renovation project there a few months ago.

Mr. Moskowitz’s son-in-law, Oren Ben Ezra, the director of the foundation that now owns the site, said the plan was to use it for “educational purposes.” But leftist Israeli politicians and advocacy groups have reacted with alarm, suspecting a secret initiative to establish a new settlement in the occupied West Bank that would further complicate the peace process.

Either way, the property, where renovations were halted after the left-leaning Israeli daily newspaper Haaretz wrote about them last month, may be the next test for the new governing coalition of Prime Minister Benjamin Netanyahu.

Davidi Perl, the leader of a string of nearby settlements known as Gush Etzion, said he had applied to Israel’s Ministry of Defense to incorporate the compound into his jurisdiction, a move that is sure to draw international condemnation. Gush Etzion is one of the so-called settlement blocs whose boundaries Mr. Netanyahu would like to define in negotiations with the Palestinians, according to comments he made recently to Federica Mogherini, the European Union’s foreign affairs chief.

Yet this compound is outside the Gush Etzion boundaries outlined in various international proposals imagining a Palestinian state alongside Israel, and it is adjacent to two particularly volatile Palestinian communities.

“Any unauthorized move like that is meant to make us problems,” said Omer Bar-Lev, one of several opposition members of Parliament who visited the site last week. “It’s not legitimate.”

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Renovations began, and were halted, at a West Bank compound tied to the Jewish-American philanthropist Irving I. Moskowitz.CreditUriel Sinai for The New York Times

Though the land is privately owned, Yariv Oppenheimer, director of the anti-settlement group Peace Now, said he believed that only the Israeli government should decide its fate.

“It’s not a private matter on property issues,” he argued. “It has to do with security; it has to do with human rights.”

Mr. Moskowitz is among the most prominent of a group of wealthy, ardently pro-Israel Americans, including Jews and evangelical Christians, who have financed development in West Bank settlements that are widely seen around the world as violating international law. From 2000 to 2010, at least 40 American groups collected more than $200 million in tax-deductible gifts to build schools, synagogues, apartments and community centers in such settlements.

Last year, the American casino tycoon Sheldon Adelson made what he said was his first investment in the region that is not inside Israel’s 1948 borders, pledging $25 million to build a medical school at Ariel University, part of a large settlement city that is among the most vexing for two-state mapmakers.

“My many years in business have taught me that when a crack opens up in a certain spot, it must not just be filled in, but rather the whole wall has to be strengthened, and sometimes the entire building,” Mr. Adelson said in a statement at the time. “The donation to Ariel University is about building a Zionist wall in place of the crack.”

Mr. Moskowitz, a retired physician who built his wealth through hospitals and bingo halls, has been involved in some of the most provocative settlement projects, buying property in Arab neighborhoods just outside Jerusalem’s Old City and turning them into apartments or yeshivas, leading to intense clashes. He owns the Shepherd Hotel, an East Jerusalem landmark that Israel began demolishing in 2011, exacerbating tensions with Washington.

In Bruchin, a settlement deep in the West Bank, the Moskowitz name adorns a day care center that was built while the community was considered forbidden even by Israel (a court in 2012 retroactively legalized it).

Mr. Perl, the settlement leader, said he thought Mr. Moskowitz wanted to turn the compound here into a hotel to lure tourists to Gush Etzion’s wineries and hiking trails. But Mr. Oppenheimer, whose group organized the site visit last week, noted Mr. Moskowitz’s history in the region and said his “goal was never to be businessman in Israel.”

As Haaretz reported, public records show that the compound has been owned at least since 2012 by the American Friends of the Everest Foundation, whose sole backer is the Irving Moskowitz Foundation. According to its 2012 tax documents, the Everest Foundation controls Scandinavian Seamen Holy Land Enterprises, a company whose operations and purpose are unclear beyond its having bought the property in 2008 from a small Presbyterian-affiliated church group in Pennsylvania.

Chaim Levinson, who broke the news in Haaretz, said he had been alerted to the renovation by passers-by who saw new security cameras at the site, as well as construction workers carrying guns. He traced the activity to Aryeh King, a Jerusalem city councilman who has worked on past projects with Mr. Moskowitz’s family.

Mr. King declined to comment for this article. Mr. Ben Ezra, the Everest Foundation director, refused to be interviewed but faxed a three-sentence response to a letter sent to him in Florida.

“Education is an important subject within the philanthropic activity of the foundation,” he wrote. “At this time, work is being done to make the old buildings and grounds safe.”

The compound, built in 1947 by an American missionary doctor who was later buried on the grounds, sits along Route 60, which runs south from Jerusalem toward Hebron. It is a few hundred yards from El Aroub Refugee Camp and not much farther from the West Bank village of Beit Ommar, both sites of frequent confrontations between young Palestinians and Israeli soldiers. On the day of a Peace Now visit, a Palestinian family was pruning in the fields just outside the stone walls topped with barbed wire that surround the former hospital.

Behind a rusted iron gate, grapevines were draped over parts of a courtyard; a basketball hoop was visible, along with a single line of colorful laundry belonging to the Palestinian family that lives at the site and considers itself its caretakers. One family member, Nader Samara, said the renovation started in January and focused on the two largest buildings, “to make a hostel.”

“It’s on hold,” Mr. Samara said last week.

Mr. Perl, who showed up, uninvited, at the Peace Now tour, said he learned a year ago that Mr. Moskowitz had bought the property, which he called “a very important point” geographically.

“They decided to try and renew and make life in the place because it was empty,” he said.

“We are,” he added, “more than happy to help the Moskowitz family to do so.”

A version of this article appears in print on , on Page A10 of the New York edition with the headline: Israel’s Work on a West Bank Site Gives Rise to New Suspicions . Order Reprints | Today’s Paper | Subscribe